2020 LTIP awards and Remuneration Update

Issuance of 2020 LTIP awards and Remuneration Update

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Rotork plc, a market leading solutions provider for the actuation, flow control and industrial markets, today discloses details of its 2020 LTIPs awards and provides an update on its proposed Remuneration Policy.

The Board are acutely aware of the impact of Covid-19 on all our stakeholders, and equally aware of the potential sensitivity surrounding Executive pay in these exceptional circumstances.

2020 Remuneration

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The Company has already announced a postponement of salary increases for 2020, including for the Board.

2020 LTIP awards were granted to Executive Directors on the 7th April under the existing Remuneration Policy and at the same multiples of salary as 2019 (details included). The Remuneration Committee considered in detail whether it should scale back these 2020 LTIP awards in light of economic issues triggered by Covid-19 and the resulting impact on the share price. The Remuneration Committee concluded that having regard to both the good share price performance in the past 12 months, and an estimated decline in the share price as a result of Covid-19 of around 20%, that it was not appropriate to scale back these awards. It was further satisfied that the proposed LTIP measures, weightings and performance conditions, which were approved prior to the Covid-19 outbreak, remain appropriate with respect to the latest three year plan, and the objectives of our Growth Acceleration Plan. The Remuneration Committee did explicitly note that it would consider whether to exercise its discretion on vesting in 2023 to ensure that the level of vesting remained appropriate.

New Remuneration Policy (2020-2023)

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Rotork is seeking shareholder approval for a new Directors Remuneration Policy at the AGM on 24 April 2020. Since the existing Policy's last approval by shareholders in 2017, Rotork has appointed a new CEO and embarked on an ambitious new growth strategy. Accordingly the Remuneration Committee undertook a review of remuneration to ensure that Executive Directors remuneration is aligned with the delivery of the new strategy, and delivers consistency of remuneration across the Group. Feedback was sought from shareholders representing more than 70% of the Company's register, as well as from the various investor advisory agencies. Based on that feedback the proposal has been revised to weight any increase in variable compensation towards the longer term. The amended proposal increases the annual bonus plan opportunity by 25%, and the longer term 3 year opportunity by 50% (the initial proposal being the reverse). In addition the new  Remuneration Policy has been brought into line with evolving best practice, aligning pension allowances for new Executive Directors with those offered to the majority of the UK wider workforce (currently 9%) with immediate effect, and for incumbent  Executive Directors by the end of 2022. In addition the new Remuneration Policy increases share ownership requirements for Executive Directors, both whilst in employment and post cessation.

In the light of Covid-19 however, the Remuneration Committee, with the agreement of the Executive Directors, has decided that, should the new Remuneration Policy be approved at the AGM, it would not implement any of the proposed increases in variable compensation (both short term or long term) for 2020. It would however continue with the proposed arrangements to scale back pension allowances for incumbent Executive Directors to provide alignment with the wider UK workforce by the end of 2022. The proposed Remuneration Policy covers the next 3 years, and whilst this is clearly a sensitive time to be seeking changes, the Remuneration Committee continues to believe that it remains in the best interest of the Company to put these new remuneration foundations in place for the longer term.

On 7 April 2020, the following directors/PDMR were granted nil cost options/conditional awards under the rules of the Rotork 2019 Long Term Incentive Plan.